In Macroland,potential GDP equals $500 billion and real GDP equals $560 billion.Macroland has a(n)_________ gap equal to ________% of potential GDP.

Question

Quizplus · Accepted Answer

The gap is expansionary because real GDP ($560 billion) is greater than potential GDP ($500 billion). The percentage gap is calculated as [(Real GDP - Potential GDP) / Potential GDP] * 100 = [($560 billion - $500 billion) / $500 billion] * 100 = 12%.

In Macroland,potential GDP Equals $500 Billion and Real GDP Equals